Natural gas bulls finally had their day in court as August natural gas futures were able to post the first positive close since Thursday of last week. The soon-to-expire contract rose 6.2 cents to $5.925 and the September contract gained 11.3 cents to settle at $6.062. Bears may have had the last laugh, however, as the August contract did manage to make a new low at $5.780 for the pervasive decline in place since mid-June.

Natural gas traders may have gotten a little inspiration from crude oil. September crude bounded higher by $2.32 to settle at $75.88.

For a moment it was “back to the future” as the electronic Globex system malfunctioned in the Nymex crude and products trading. A “reboot” of the system required that natural gas trading be shut down. “First the crude and products went down and then the natural gas went down, and it seemed like old times,” said a New York floor trader.

The electronically traded Globex crude and products went down at 11 a.m. EDT, followed by natural gas at noon. All contracts resumed trading by 12:15 p.m. “Maybe this will remind everyone that this (electronic trading) may not be the best thing to do. It will no doubt trim trading volume on Globex but it got busy on the floor. The phones started ringing, and it shows that on some level the floor is still necessary,” he said.

Traders studying market fundamentals will be taking a close look at Thursday’s 10:30 a.m. EDT release of storage data. A Bloomberg survey of 21 analysts revealed a consensus estimate of a 70 Bcf increase in supplies, the median of those polled. The range of the survey was 55 Bcf to 82 Bcf. Analysts at Strategic Energy and Economic Research are expecting a build of 69 Bcf. Bentek Energy, a Golden, CO-based energy consulting firm, is expecting a build of 70 Bcf. Bentek models the injection of gas solely on natural gas flow data, rather than the more popular temperature-based statistical regressions. A Reuter’s survey also projects a 70 Bcf injection.

Technical traders see the market poised to possibly work much lower. “Our Elliott Wave model shows natural gas futures in the fifth wave of a five-wave decline, which could take it to the low $5 area,” said a Washington, DC broker.

Elliott Wave analysis is an analytical technique that relies on the matching of observed price trends with predetermined cycles, which adherents claim can be used for market timing and price projection. The Dow Theory, for example, is applied to the movement of common stock prices and is based on the premise that important cyclical trends in stock prices can be determined by studying the movement of the Dow Jones Industrial Average and the Dow Jones Transportation Average. Elliott Wave analysis models prices on a five-wave pattern, with three waves taking place in the direction of the major trend (in the case of natural gas, down) and two corrective waves against the trend. The five-wave pattern began May 18 when futures traded as high as $8.23, the broker said.

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